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The shift towards indirect tax and what this means for the graduate of today


The shift towards indirect tax and what this means for the graduate or trainee of today

Unless you’ve been living under a rock, you’ll have noticed that global tax issues are taking their fair share of news headlines these days. This is primarily represented by the mainstream media’s observations of EU tax avoidance amongst many corporate giants (for instance Google, Facebook, Starbucks, Apple, McDonald’s, and Amazon to name a few!). Whether the media are speculating on 'tax avoidance' (the legal use of tax laws to reduce one's taxes) or 'tax evasion' (a term used in a criminal context to reflect the illegal misrepresentation of taxable income), tax always makes a grabbing headline. And we saw plenty of this last year, ranging from MNCs in the EU to the Panama Papers.

At the same time, the non-tax person of today who follows any kind of ‘news’ app is also seeing a lot of talk about other tax issues. Whether that’s tax digitalisation, the drafting of a landmark GST bill in India, talks about the UK leaving the EU VAT regime in a ‘hard Brexit’, other major economies implementing a value-added tax, or even Jeremy Corbyn’s accusations of a sweetheart deal underpinning a Tory-run Surrey county council seat.

Whether it’s on a local or international scale, tax is thoroughly on the agenda of our news tablets.

Sifting through these headlines, many of today’s tax affairs make a compelling (and quite attractive) case for why the graduate or trainee accountant of today might seriously consider delving down the specialist ‘indirect tax’ path as opposed to the traditional 360 degree tax positions or the popular routes of corporate tax. 

For such job seekers (or future job seekers), it’s therefore certainly worth paying attention to the global rise of indirect tax.

The rise of indirect tax

One of the ongoing commentaries amongst tax professionals and economists over the last couple of years has been focused on the shift from direct taxes to indirect taxes. 

The OECD's most recent figures indicates that corporate tax revenues have continued to fall since the global economic crisis, whilst VAT revenues climb. By 2014, VAT revenue had reached 20.1% of total tax revenue and it’s speculated that this trend will continue due to the various changes taking place in the global tax market.

Many major economies, for instance, are now introducing Customs & Excise duties and a value-added taxation. Think of China, whose pilot VAT programme seems to have moved a long way since 2012, or even India’s passing of the historic GST bill last summer. Both China and India represent a huge push in the global spread of indirect taxation. Even in recent weeks, we’ve seen a significant step forward in the journey of VAT implementation across the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE) as Saudi Arabia approved an IMF-backed value-added tax to be imposed across the Gulf as a measure for tackling the oil revenues slump from 2014. Several days later, the remaining GCC countries signed the much-delayed unified VAT framework agreement. 

And on the other side of the pond, indirect tax has worked it’s way into President Trump’s agenda as he seeks out a financial solution for ‘The Wall’ in a proposed border tax scheme (see how a border tax could work here). 

On the peripherals of all this global indirect tax activity, let’s not forget about the ever-growing demand for tax technology which is playing a huge role in reinventing the indirect tax market! This alone is fuelling interesting debates and having a huge impact on tax recruitment demands.

What does this mean for your career?

Whether it’s through legislation or the push for digitisation, the global tax industry is evolving and reinventing itself at a rapid pace. In fact, there’s probably been more changes in the last 5 years of tax than there has in the last 30 years!

From a recruitment perspective, you should be thinking about this. 

The apparent shift from CIT to indirect tax makes a compelling case for why the graduate of today should seriously consider a career in this arena. Here’s why:

  • Whilst indirect tax is a niche career path to take, this is the beauty of it. It comes down to that mile deep, inch wide philosophy. If you start off early in a specialist field, there’s every reason to aspire to becoming an industry expert!
  • If you’re going to be a specialist in any field, why not do it in one that’s becoming increasingly significant on a global scale?
  • With indirect tax being a candidate short market, there is an increasing amount of mobility, career progression, and choice available (particularly for those hitting the Manager grades!).
  • Candidate short market = increasingly competitive (and reviewed) salary structure.
  • If you speak a second language (particularly a European language), consider yourself even more attractive in the VAT market!
  • It’s not all about crunching numbers… There’s a huge amount of variety within the indirect tax world, spanning across the legal sector, technology, advisory firms, in-house roles, and even the more commercial or sales focused VAT roles too!
  • There are good opportunities for global mobility. Many of our UK & European candidates are currently asking us how they can take their experience to the GCC region!
  • With the rise of indirect tax, many senior in-house tax positions (Head of Tax, VP Tax) are increasingly becoming more suited to candidates from an indirect tax background as opposed to direct tax. 
  • And for the long-term? With tax continuing to become more integrated with a business’s wider finance function, many have concluded that a Head of Tax makes a prime candidate to become a CFO.

This is just a sample of - what I feel - are the key reasons why the indirect tax profession makes an extremely viable and attractive route for the graduate or trainee accountant of today. But, if I could stress one point out of the above, it would be the prospect of developing that mile deep, inch wide knowledge in an increasingly important market. Now seems like an excellent time to seriously be thinking about an indirect tax career.

However, whilst my opinions may shed some light on the attractiveness of an indirect tax career, there’s certainly more value in hearing the opinions of those who have taken this journey themselves. 

Two years ago I met Daniela Alexandru (Service Delivery Manager, TMF Group) to understand the requirements of recruiting into her Brighton team and she provided fascinating insights into what she feels are the key indicators of a successful indirect tax professional, which I felt resonated with this blog. 

Despite being someone who ‘never wanted to become an accountant’, Daniela has now been with TMF Group for over 12 years and currently plays an important role in their European VAT compliance services and managing the Brighton team. 

Naturally I was very keen to pick her brains on this topic and, kindly, Daniela has shared some of her experiences in a short interview.

Interview with Daniela Alexandru from TMF Group:

Daniela, when you first joined TMF, you came from a much broader accountancy background and continued this at TMF for several years before moving over to the world of VAT. I'm sure many would agree that European VAT can be complicated at the best of times. How did you find the transition from a broader accountancy role to a more specialist VAT position?

I joined TMF Group more than 12 years ago, you might say a long time, but it seems like I joined TMF Group yesterday; everything is so dynamic and I don’t know where the time has flown. What is funny is that I never wanted to become an accountant. When I had to choose my speciality, I said to my Dad “I will never be an accountant”, and here I am. Having said this I need to admit that I wouldn’t change anything, and this is because TMF Group opened another world for me. 

I still remember my first day at TMF Romania, I was mesmerised by the international environment in the office, and working in a multinational back in 2005 was any graduate’s dream, including for myself. Working at TMF Group gave me exposure to different industries and, most importantly, I met great people that helped me to develop throughout the years with patience and dedication.

While at TMF Romania, I started working with TMF UK in 2009 on some mutual clients that my team was managing, and in 2013 I received an offer from TMF UK to join the VAT team as a Team Manager in Brighton.

The decision was not easy, because I was moving from a broader accountancy and tax background to a niche - VAT. But the decision driver at that point, for me, was the fact that the Brighton office was coordinating the work done by 30 offices (Romania being one of them), including the relationship with clients, and therefore I embraced the challenge and we agreed that I would come on a six-month assignment to TMF UK. So, my journey with TMF in Brighton began on the 1st of March 2014 and here I am, still here almost three years later.

Why? Because I like what I do, because I am grateful to work with such a great team. Each member of our team is bringing something unique and this is the beauty of diversity. And last but not least, because every day can be a challenge which encourages you to think outside the box.

Do you think that your accountancy background helped you overcome the challenges of the complex nature of VAT?

Yes it did, because the main VAT principles are the same, it is just the differences between countries that one would need to understand. Not to mention that we have the support of the local offices that are helping us if we have any clarifications on local legislation. Plus, one of the Brighton teams’ strengths is technical knowledge sharing. There is an amazing team spirit, and sharing knowledge is one of the key elements on which our team is built.

Do you see a particular route into indirect tax being more significant than others? For example routes through the tax authorities, professional services, legal and advisory firms, or industry.

From my point of view, it’s up to the individual. Where there is will, there is hope. As they say, “the sky‘s the limit”, because it doesn’t matter where your experience is built/started, as long as you want to make a career in indirect tax. Determination is the key, and of course hard work, because indirect tax is a field where you can learn new things every day.

There are a lot changes happening on the global tax scene with indirect tax taking up a lot of headlines, for example many major economic countries are now introducing a value-added taxation, ie. China, India with GST, and the GCC. To me, this shift towards indirect taxation seems to be one reason why someone should consider this as a potential career route. What are your thoughts?

As you mentioned there are a lot of changes happening around the world and, as the pressure is increasing on businesses for tax compliance, it is important for external providers such as TMF Group to make sure we are there to support our clients and, importantly, to adapt to their needs.

The fact that many global companies have their own dedicated indirect tax departments is an example of just how important indirect tax has become. These companies need to make sure that they’re complying with local legislations irrespective of where the tax obligation might arise. Companies such as TMF Group work closely with our clients’ tax teams to make sure that all of their requirements are fulfilled, on time. So, yes indirect taxation is clearly a field that continues to grow, offering people a lot of opportunities both in-house and externally.

Daniela, one of your responsibilities is overseeing the Brighton VAT team at TMF, so you naturally see many people join the team who aspire to a career in VAT. I remember from the first meeting we had two years ago that you placed a large emphasis on one's 'passion for tax’. Why is this so important and is there anything else that you think makes an indirect tax professional successful?

Indeed, I think that it is important to be passionate about tax, or at least to have an inclination towards accountancy because if you’re at the beginning of your career and you don’t know what you want to do, dealing with VAT compliance can be – let’s say – “challenging”. Also, the fact that our day-to-day work is about working with numbers, attention to detail is crucial. Not to mention that the VAT world is driven by deadlines, and therefore the ability to work under that pressure is also important!      

If you could go back in time to when you started out in VAT and give yourself one piece of advice, what would it be?

I don’t think that I would change anything because I got to where I am today due to the decisions that I made throughout the years, and this gave me the opportunity to work with great people from which I learned a lot, both in Romania and now in the UK. I count myself lucky to have this opportunity, it was a journey involving a lot of hard work, but I think it paid off quite nicely.

TMF Group was founded in 1988 in the Netherlands and since then it has grown rapidly, operating today in more than 120 offices across over 80 countries, including three offices here in the UK. Their office in Brighton is specialized, currently, in European VAT. They offer support to clients and help them to fulfil their tax obligations in Europe, regardless of whether they need to register in one country or 30 countries. TMF Group offer support to their clients so that they can concentrate on their day-to-day work, while they are dealing with their European VAT compliance. 

About the author, Alex Mann.

Thanks to Daniela Alexandru from TMF Group for her time.

A quick link to the  Indirect Tax jobs.

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